Are Apple and Google just a bump in the road for the automotive industry?

Tech year 2016 has started the same way as every other recent year – with major announcements at the Consumer Electronics Show (CES) in Las Vegas. Increasingly, though, the past couple of years have seen a shift from companies such as Sony and Philips taking all the attention to Toyota (which made big waves with its fuel cell patent announcement in 2015) and other automotive players capturing the limelight.

The Financial Times reported from CES 2016 on “the battle for the dashboards” inside cars with the headline that Toyota has adopted Ford’s infotainment and dashboard technology, SmartDeviceLink (SDL). It also reported on other major automotive players (eg, PSA Peugeot Citroën, Honda, Subaru and Mazda) potentially adopting SDL.

Controlling standards – whether de facto or technical – in a converging marketplace are usually of high strategic importance, with intellectual property at the core. App stores and mobile operating systems also showcase this.

As interesting as smartphone integration or automotive information standards are on their own, they also demonstrate how automotive companies are increasingly becoming technology companies – which means competing with new competitors in new areas, where they likely do not have as strong an IP position as they hold in their traditional domains.

Of course, automotive companies are not the only ones to spot the opportunity to owning the dashboard inside cars. Apple launched Carplay in 2014 and Google launched Android Auto in 2015. Microsoft also has its own version, Windows Embedded Automotive 7, which has been developed over 10 years in collaboration with the likes of Ford, Fiat, Nissan and Kia.

The charts below investigate the relative IP positions of the companies in this space, isolating the connectivity, user interface and dashboard aspects.

Figure 1 shows the surging portfolios among tech companies in this space, with all tech companies having hundreds – or in the case of Microsoft, over 1,000 – granted patents, compared to automotive players which have dozens, or at most around 100.

Table 1 presents another view of this data, making clear the small proportion of overall portfolios of automotive and tech companies that relate to this area. 

Table 2 gives yet another view, demonstrating examples of relevant patents that have been acquired by tech companies. So far, acquisitions are much less common among automotive companies or automotive suppliers.

Figure 2 takes a more detailed look at the tech companies holding the largest portfolios. The timelines of their portfolios reflect the release dates of their product offerings, with Microsoft having earlier patents than the others. Interestingly, the trend within Microsoft and Apple appears to have declined at the same time Google increased its activity.

With this being a truly global market and companies from various continents using the same platform, the geographical aspect of the intellectual property is naturally important. However – and as is often the case – few companies have global IP coverage, rather tending to focus on their home markets.

Figure 3 shows the differences between the automotive companies and their focuses on home markets. Compared to the tech companies seen in Figure 4, Toyoya and VW have relatively broad coverage, as the tech companies focus almost exclusively on US coverage.

The final aspect that must be considered with every initiative, especially in these converging technology areas, is the element of IP risk. Figure 5 shows the surge in litigation among vehicle manufacturers. This coincides with the increased connectivity in cars and the rise of non-practising entities, which account for 95% of the 383 lawsuits involving the automotive companies in this study.

Ford and the other automotive manufacturers clearly have a strategy and vision for connectivity and interactivity in vehicles. It is undoubtedly an interesting development that, in an industry which historically has not been keen on sharing and collaboration, a major manufacturer has implemented such a key component from a nominal competitor. But before they get carried away and discard Apple’s Carplay and Android Auto, the manufacturers should consider the absolute IP advantage and heritage that tech companies have in that space.